US business tax after the One, Big, Beautiful Bill: expensing is back

Country reference

• Country: United States (planned expansion country)
• Authorities: Internal Revenue Service (IRS); US Department of the Treasury
• Topic: Business provisions of Public Law 119-21 (enacted 4 July 2025)
• Key date: Most business changes apply from 2025; IRS guidance issued through 2026
• Law: Public Law 119-21 (One, Big, Beautiful Bill Act)

Capital investment

• Bonus depreciation: a permanent 100% first-year deduction for qualified property acquired after 19 January 2025, with an optional 40% election (60% for long production period property and certain aircraft).
• Section 179: the expensing limit rises from $1 million to $2.5 million, phased out above $4 million of qualifying property, for tax years beginning after 2024, indexed from 2026.
• Qualified production property: a new 100% first-year deduction for most qualifying production property bought and used after 19 January 2025.

Research and development

• New section 174A: domestic research and experimental costs can be deducted immediately, or amortised over at least 60 months, for tax years beginning after 31 December 2024.
• Foreign research costs are still amortised over 15 years.
• Transition rules are in Revenue Procedure 2025-28.

Other changes for businesses

• A 1% excise tax on cash-funded remittances abroad from 1 January 2026.
• Third-party payment network backup withholding only above $20,000 and 200 transactions a year.
• Clean vehicle credits ended for vehicles acquired after 30 September 2025.
• Clean fuel production credit extended for fuel sold before 2030.

What to do now

• Review the 2025 and 2026 fixed asset registers for bonus depreciation and section 179.
• Decide whether to expense or amortise domestic R&E, and apply the transition rules for earlier years.
• Recalculate estimated tax payments and deferred tax balances.
• Foreign-owned US subsidiaries: reassess where R&D is performed, given the 15-year rule for foreign costs.

Our take

Immediate expensing makes US investment cheaper in cash terms. For Gulf investors building US operations, timing of asset purchases and where R&D sits now have a clear tax value.